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Compounding with different interest rates a deposit of $750 earns interest rates of 10.5 percent in the first year and 7.5 percent in the second year. what would be the second year future value? $890.91 $885.00 $829.43 $1,635.00

Respuesta :

carlosego
1. You have:

 FV=PV(1+i)(1+j)

 FV is the future value.
 PV is the present value (PV=$750).
 i=10.5%=0.105
 j=7.5%=0.075

 2. Therefore, you only have to substitute these values into the formula FV=PV(1+i)(1+j) to obtain the Future value:

 FV=PV(1+i)(1+j)
 FV=$750(1+0.105)(1+0.075)
 FV=$750(1.105)(1.075)

 3. Then, the result is:

 FV=$890.91

 What would be the second year future value?

 The answer is: $890.91

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